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Ignore the US government’s economic figures – base your decisions on real data | Genetic marks

By on October 30, 2022 0

JTrying to figure out the future in today’s climate is enough to give you a headache. Where is the economy going? Should we take risks or go around the wagons? Can you hire and spend or do you need to cut overhead and retract? People rely on you to make the right decisions. But unfortunately, the data that most of us receive is not very useful.

For example, this week the United States released gross domestic product (GDP) – the broadest measure of the health of the economy – rebounded last quarter. Good news? My advice: ignore it. Why? Because, like most of the big numbers the government reports, this number is based on polls, and how accurate are you when answering a poll? At worst it’s inaccurate, at best it’s only preliminary data that is revised several times over the following months. By the time they are finalized, the data is too old to be useful to any business leader looking to determine the economic future.

My advice: base your decisions on real data.

Don’t spend too much time analyzing the monthly unemployment rate from the Bureau of Labor Statistics. This too is estimated (and revised). However, information from ADP and Paychex – the two largest payroll services companies in the country – is based on real data from their real customers in their real payroll systems. Last month, ADP reported that the country created 208,000 new jobs and that annual salary increases were 7.8%. Paychex reported a slowdown in small business hiring and hourly wage increases of about 5% from a year ago.

I also ignore the dozens of surveys presented to me by companies and their PR firms measuring small business “optimism” and “confidence”. They mostly push someone else’s agenda and aren’t very scientific. Instead, I look at banks. This month, for example, the CEOs of JP Morgan and Wells Fargo seemed quite (if not surprisingly) positive about their small business loans and credit card spending data from their actual customers.

When it comes to consumer spending, ignore the US Census Bureau’s retail sales numbers. and beware of industry reports, because even National Retail Federation numbers are estimates and let’s face it: this is a professional association that wants to avoid bad news about its members.

I prefer to keep a close eye on large public companies that actually sell to actual consumers. The retail revenues of large companies like walmart, Target and Amazon are published at the end of the month following the end of the quarter. Also, take a look at how FedEx and UPS fare, as they ship just about everything that’s made and sold online. FedEx reports an 11% drop in deliveries in the last quarter.

If you want a good barometer of the global economy, there’s nothing better than the Baltic Dry Index. This is an index that measures the cost of shipping via the Baltic Sea, one of the busiest shipping corridors in the world. If the index increases, it means higher demand for freight, which means increased maritime activity. Unfortunately, the index has dropped significantly over the past year.

Travel is essential to the economy because when people are on the move, they visit customers and suppliers, attend conferences and go on vacation. You can wait to hear what the airlines are reporting, but more up-to-the-minute insight into the state of the industry can be found in the daily reports compiled by the Transportation Security Administration. Since last week, travelers passing through US airports have been at about 95% pre-pandemic levels.

The government releases all kinds of numbers on housing starts and home construction, but the numbers I’m looking at are from the American Institute of Architects. They are the ones who are hard at work planning the non-residential construction of tomorrow. So the busier architects are today, the better off the industry will be in the coming year. This month’s index shows continued growth, which is a good sign for the future. Also, instead of waiting for another government investigation into real estate activity, watch Realtor.com Weekly Real Estate Trends exam. This week, for example, we see housing inventories significantly higher and new listings significantly lower than a year ago. It’s not a good year to be in this industry – or to rely on this industry for sales.

Although I am not a fan of polls, there is one that I like and that comes from the Supply Management Institute. This is an industry group made up primarily of purchasing managers. What better way to know how an industry is doing than to ask how much it buys, right? Every month, they accumulate a lot of data from their members and then split it between manufacturing and service companies. According to the ISM, manufacturers are flirting with retraction but the service sector remains quite solid.

We are all trying to figure out where the economy is going. Right now it’s a mixed bag, but overall the trend is down. How can I say? Relying on real data from real companies instead of estimates and surveys which are best guesses and subject to further revisions. So should you.